Uncategorized

Monday, February 10, 2014 – Set the Tone

Set the Tone by Sinclair Noe DOW + 7 = 15,801SPX + 2 = 1799NAS + 22 = 414810 YR YLD + .03 = 2.69%OIL + .12 = 100.00GOLD + 7.90 = 1276.00SILV + .07 = 20.18 A little bit of follow up to last Friday’s jobs report, which you recall came in at 113,000 jobs added in January and the unemployment rate dropping to 6.6%. There was a huge discrepancy between the household survey and the business establishment survey; the household survey showed 616,000 new jobs. The household survey can be a bit volatile and is considered less reliable. There is also a discrepancy between the establishment survey and a couple of earlier reports from ISM and ADP. The Institute for Supply Management services index came in at 56.4% in January, indicating a strong month for service jobs. The ADP, or Automatic Data Processing, employment report indicated 160,000 private sector service jobs were created in January, or about 100,000 more jobs than the government reported. It will be very interesting to watch revisions to the jobs report next month. The major stock indices just loved the lousy jobs report, and this is a head scratcher for many people. Why would bad news on jobs be good news for stocks? Well, a weak job market gives employers the upper hand because most workers will accept lower wages, which translates into higher profits for corporate America. I know that is short sighted because the workers are also customers, but in the …

READ MORE →
Uncategorized

Monday, February 03, 2014 – Another Piece of Cake, Marie?

Another Piece of Cake, Marie?by Sinclair Noe DOW – 326 = 15,372SPX – 40 = 1741NAS – 106 = 399610 YR YLD – .09 = 2.58%OIL – .78 = 96.71 GOLD + 11.20 = 1258.10SILV + .17 = 19.44 In economic news, manufacturing activity slowed sharply in January on the back of the biggest drop in new orders in 33 years while construction spending barely rose in December. Maybe it had something to do with the cold weather, maybe it’s just a pause after slightly stronger economic growth in the third and fourth quarters. The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.3 last month, its lowest level since May 2013, from 56.5 in December. It was the second straight month of slowing growth from November’s recent peak reading of 57, which had been the highest since April 2011, and indicated manufacturing was slowing after output grew at its fastest pace in nearly two years in the fourth quarter. Underscoring the weather impact, delivery delays increased a bit last month, but the biggest red flag was the huge drop in the forward-looking new orders index, which fell to 51.2 from 64.4 in December. That 13.2-point drop was the largest monthly decline in the key component since December 1980. In a separate report, the Commerce Department said construction spending rose 0.1% in December, slowing from the prior month’s 0.8% increase. While private construction spending hit a five year high, outlays on public construction projects …

READ MORE →
Uncategorized

Monday, January 06, 2014 – A Cold Forecast

A Cold Forecast by Sinclair Noe DOW – 44 = 16,425SPX – 4 = 1826NAS – 18 = 411310 YR YLD – .03 = 2.96%OIL – .31 = 93.65GOLD – .20 = 1238.80SILV + .02 = 20.27 A few big things this week. Friday we’ll see the monthly jobs report. Today we had the confirmation of Janet Yellen, no surprise there; on Wednesday we’ll see the minutes of the most recent FOMC meeting which will give us the justification for the taper. The minutes will likely include strong differentiation between taper and tightening, and the Fed is likely to stress the importance of accommodative monetary policy and ultra-low interest rates for the next 18 months or so. Any bond gains have been curbed as we start the new year; a combination of the Fed slowing its bond purchases, plus corporate supply, plus there is still the safe haven aspect of bonds in the face of a few days of weakness in the equity markets. This Friday’s jobs report will prove important as a barometer for yields. More than 2.2 million jobs were probably created in 2013, the most since about 2.5 million eight years earlier. The estimates call for 195,000 net new jobs in December and the unemployment rate to hold at 7.0%. If the economy added more than 200,000 jobs we might expect a more aggressive taper; fewer than 200,000 jobs and the taper might be more sanguine. Healthcare spending in the US rose 3.7% in 2012 to $2.8 …

READ MORE →
Uncategorized

Wednesday, December 04, 2013 – The Defining Challenge

The Defining Challenge by Sinclair Noe DOW – 24 = 15,889SPX – 2 = 1792NAS +0.80 = 403810 YR YLD + .05 = 2.83%OIL + 1.25 = 97.29GOLD + 19.00 = 1244.30SILV + .54 = 19.82 December can be a cold, cold month. At least that’s how the equity markets are starting the month; four losing sessions. Part of this might be the big institutional investors, the big hedge funds and money managers, looking around and realizing the market is up 30% or so, and that would be a good year, so why no lock in a few profits. No need to worry about the budget battle in Washington; no need to worry about the Federal Reserve surprising people with a premature taper; no need to worry about a strong jobs report on Friday. In this crazy market where good economic news gets traders worried about the Fed taking away the punch bowl, today we had some reasonably decent economic news and another drop in the markets. Let’s start with the economic reports. ADP, the payroll processing firm, has a monthly report on private jobs; they issue the report just before the monthly official government report on jobs, the BLS non-farm payroll report. The ADP report is not great at predicting the government report, but its one of the better guidelines we have. Today, ADP reported companies added to their payrolls by a net 215,000 in November, and they revised the October number higher to 184,000. Manufacturers, builders and other …

READ MORE →
Uncategorized

Monday, December 02, 2012 – The Home Stretch

The Home Stretch By Sinclair Noe DOW – 77 = 16,008SPX – 4 = 1800NAS – 14 = 404510 YR YLD + .05 = 2.79%OIL + 1.19 = 93.91GOLD – 32.80 = 1220.30SILV – .73 = 19.31 Stocks were down today. There are many possible explanations, but the one that makes sense to me is that we just couldn’t have a record high celebration with milk and cookies; not after all the pie I ate over the holiday. There are other explanations as well. Anyway, we survived Black Friday, mainly by sitting it out. Black Friday comes with its own unofficial economic data point as the most important shopping day of the year. And we always hear the erroneous, or at least mildly misleading caveat that consumer spending accounts for nearly 70% of gross domestic product, making this large shopping day extra important. Thanksgiving and Black Friday combined brought in an estimated $12.3 billion in sales, according to shopping analytics firm ShopperTrak. Thanksgiving Day traffic grew 27% as nearly one-third of shoppers headed to stores on the holiday. About 97 million people planned to shop online or in stores on Friday, with about 140 million intending to do so Thanksgiving through Sunday. That’s down from 147 million last year. Overall spending was expected to reach $57.4 billion for the weekend, that’s down from $59.1 billion last year. Thanksgiving and Black Friday fell a week later in the season this year, leading stores to push pre-Black Friday deals and shifting consumer …

READ MORE →
Uncategorized

Friday, October 04, 2013 – This Is Not A Game

This Is Not A Game by Sinclair Noe DOW + 76 = 15,072SPX +11 = 1690NAS + 33 = 380710 YR YLD + .04 = 2.65%OIL + .39 = 103.70GOLD – 5.50 = 1312.20SILV + .04 = 21.84 The government showdown continues. So, there isn’t much actually happening. We don’t have a jobs report to analyze. The next jobs report will be so screwed up by the shutdown that it won’t be possible to make heads or tails of it, whenever it is reported. We don’t need a functioning government to tell us that the job market is lousy. But we do need one to help make the job market better. It’s the first Friday of the month, usually the day we get a bunch of random numbers from the government telling us what we already knew: Good jobs are scarce. This month, the government is too busy being held hostage by House Republicans to give us those random numbers. But there’s plenty of evidence already that September was grimly similar to many of the months that came before it in this grinding recovery. With sagging consumer confidence and hiring surveys, September may even have been worse than August. Whenever Bureau of Labor Statistics workers stop being furloughed by a government shutdown, economists, on average, expect it to report 185,000 new jobs on nonfarm payrolls in September and an unemployment rate holding at 7.3 percent. And if we look at this week’s ADP report and the ISM hiring survey, we …

READ MORE →
Uncategorized

Thursday, August 01, 2013 – From Russia With Love

From Russia With Love by Sinclair Noe DOW + 128 = 15,628SPX + 21 = 1706NAS + 49 = 367510 YR YLD + .13 = 2.72%OIL – .08 = 107.81GOLD – 14.30 = 1309.90SILV – .18 = 19.73 Record highs for the Dow and the S&P 500 indices. Economic data today from the Institute for Supply Management; its index of national factory activity rose to 55.4 last month from 50.9 in June, with increases in new orders and production. A reading above 50 indicates expansion in the sector, which hit a soft patch in the spring. The pick-up in manufacturing was also corroborated by financial data firm Markit, which said its U.S. Manufacturing Purchasing Managers Index rose to a four-month high in its final July reading. Measures of factory jobs rose in both reports, with the ISM employment index reaching its highest since June last year. The improvement in employment is in line with a separate report from the Labor Department showing initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 326,000 last week, the lowest since January 2008. In another report, consultants Challenger, Gray & Christmas said planned layoffs at U.S. firms fell 4.2 percent in July. Tomorrow morning we’ll get the government’s monthly jobs report. The government is expected to report nonfarm payrolls increased 185,000 last month after rising 195,000 in June. And the unemployment rate might inch down to 7.5%. Overall job gains in the second quarter averaged 196,300 per month. A federal court …

READ MORE →
Uncategorized

Thursday, June 27, 2013 – To Not Trade in Principles

To Not Trade in Principles by Sinclair Noe DOW + 114 = 15,024SPX + 9 = 1613NAS + 25 = 340110 YR YLD – .05 = 2.48%OIL + 1.35 = 96.85GOLD – 24.40 = 1201.80SILV – .01 = 18.61 First some economic news, then we’ll head to Ecuador. Consumer spending rose a seasonally adjusted 0.3% in May, reversing a 0.3% decline in April. So, for the past 2 months, it’s a wash. Adjusted for inflation, the numbers are slightly lower. Consumers bought more cars and trucks in May and spent a bit more on gasoline, reflecting higher prices at the pump. They also ate outside the home more often and shelled out extra cash for housing, financial advice, insurance and recreational activities. Since incomes rose faster than spending in May, the savings rate of Americans climbed to 3.2% from 3%. That’s the highest level since December and well above the 2013 low of 2.2%. In a separate report, the Labor Department reported a 9,000 drop in first-time jobless claims for the last week. The National Association of Realtors reports pending home sales jumped in May to reach a six-year high, The NAR’s pending home sales index climbed 6.7% to 112.3 in May, from a downwardly revised 105.2 in April. The index was up 12.1% from May 2012 levels.  Freddy Mac reports the average rate for the 30-year fixed-rate mortgage rose to 4.46% in the week ending June 27, the highest rate in a couple of years, and up from 3.93% in the …

READ MORE →
Uncategorized

Monday, June 03, 2013 – Cardboard Cutouts, Inflatable Tanks, and the G-8

Cardboard Cutouts, Inflatable Tanks, and the G-8 by Sinclair Noe DOW + 138 = 15,254SPX + 9 = 1640NAS + 9 = 3465 10 YR YLD – .03 = 2.13%OIL + 1.42 = 93.39GOLD + 22.90 = 1412.20SILV + .48 = 22.84 Have you ever heard the expression “Potemkin Village”? That expression which dates back to the story about the head of Russia’s Crimean military campaign, who allegedly created false villages along the Dnieper River to reassure Czarina Catherine II that all was well as she sailed past. Have you ever heard of the Ghost Army? Also, known as the 23rdHeadquarters Special Troops, an elite force whose specialty was tactical deception, they proved their value in World War II. The Ghost Army, some 1,100 men in all, ended up staging more than twenty battlefield deceptions between 1944 and 1945, starting in Normandy two weeks after D-Day and ending in the Rhine River Valley. They used inflatable tanks and airplanes and recordings of the sounds of an army to trick the Germans into thinking there were troops where there weren’t. Have you heard about the G-8 economic conference coming to Northern Ireland in a couple of weeks? Northern Ireland has had a tough time over the past few decades, and in the small town where the G-8 will be meeting, there are quite a few closed down businesses and shuttered storefronts. So, in anticipation of the economic conference, they have been been doing some purely cosmetic surgery. Painting the windows of …

READ MORE →
Uncategorized

Monday, April 29, 2013 – A Busy Week Heading in the Same Direction

A Busy Week Heading in the Same Direction by Sinclair Noe DOW + 106 = 14,818SPX + 11 = 1593NAS + 27 = 330710 YR YLD + .01 = 1.67%OIL + .58 = 93.58GOLD + 13.60 = 1477.50SILV + .55 = 24.69  The S&P 500 index ended at an all-time high. We have a celebration when the Dow Industrial Average closes at an all time high; no party for the S&P 500. I wish I could give you a valid reason for this but it defies logic. There is no law that says you can’t enjoy milk and cookies anyway. This week offers a packed economic calendar,with ISM manufacturing data Wednesday, and PMI manufacturing reports for the euro zone and China on Thursday. The week ends with Friday’s U.S. employment report, expected to show 150,000 new nonfarm payrolls in April; and the backdrop to all the information is last Friday’s initial report on first quarter GDP, which came in at 2.5%, short of the consensus forecast of 3%.  Also, we’ll compare and contrast this week’s news with last week’s reports out of Europe showing economic weakness in Germany as well really bad weakness in the peripheral countires where unemployment is rising from one awful record to another. In Spain, for example, the rate increased to 27.2%, with an even more stunning 57.2% rate among the young. In Greece, the unemployment rate tops 27% and the government is cutting thousands more jobs to qualify for more ECB bailout money. The European …

READ MORE →